Fixed-rate deals slashed as mortgage price war hots up

Published 22nd Apr 2010

Two-year fixed-rate mortgages have been cut to less than 3 per cent.

Banks and building societies are locked in a price war that has helped trim the cost of deals. But you may have to act fast to snap up the best rates - last week little Hanley Building Society withdrew its market-leading two-year fix at 2.95 per cent for borrowers with a 25 per cent deposit after just three days.

Top of the pile for sub 3 per cent rates at the moment are Yorkshire BS, Barclays, HSBC and Alliance & Leicester.
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The Yorkshire offers 2.99 per cent for those with a 40 per cent deposit. There is a £1,795 fee. Typical repayments on the average £150,000 loan would be £711. Total cost over two years is £18,859.


HSBC has the same rate but borrowers need only a 30 per cent deposit. Repayments would be £711 but the total cost is £18,063, as the fee is a lower £999.

Alliance & Leicester offers 2.89 per cent for those with a 30 per cent deposit, but its fee is 2 per cent of the amount you borrow. So if you have a small loan it can be manageable - but on a typical £150,000 loan it would be £3,000. Even though monthly repayments are a lower £703, the total cost would be £19,872.

An alternative for borrowers with bigger mortgages is Barclays. It charges 2.98 per cent with a 30 per cent deposit and a £1,999 fee - but you must borrow at least £250,000. At this amount, the typical repayment would be £1,183.

David Hollingworth of broker London & Country says: ‘The knock-on effect of these price changes is that rates in the tier above this are also getting that little bit cheaper. It’s pretty good news for all.’

Source: ' Daily Mail '

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